Paul Hamerman R "Ray" Wang

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  • Our translations: mySAP Business Suite/ERP = the applications Enterprise SOA = the service-enablement of the applications NetWeaver = the middleware platform Business process platform (BPP) = NetWeaver + Enterprise SOA
  • In January 2006, Oracle clarified its strategy: Fusion Middleware — Oracle’s applications infrastructure Fusion Applications — Oracle’s next-generation application suite, based on convergence of 5+ product lines
  • Paul Hamerman R "Ray" Wang

    1. 1. September 17, 2007. Call in at 12:55 p.m. Eastern Time Paul Hamerman R “Ray” Wang Vice President Principal Analyst Forrester Research Teleconference Next-Generation ERP Strategies
    2. 2. Agenda <ul><li>Market trends and survey data </li></ul><ul><li>Overview of the ERP market </li></ul><ul><li>The on-going technology evolution </li></ul><ul><li>Key vendors and product strategies </li></ul><ul><li>The future of ERP </li></ul><ul><li>Questions and answers </li></ul>
    3. 3. Theme Despite all the SOA hype, ERP strategies should focus on business users and the processes they support
    4. 4. Agenda <ul><li>Market trends and survey data </li></ul><ul><li>Overview of the ERP market </li></ul><ul><li>The on-going technology evolution </li></ul><ul><li>Key vendors and product strategies </li></ul><ul><li>The future of ERP </li></ul><ul><li>Questions and answers </li></ul>
    5. 5. Packaged applications remain a top IT priority in 2007 Rank 2007 2006 1 2 3 4 5 6 7 8 2 1 4 3 N/A 5 N/A 6 “ Which of the following initiatives are likely to be one of your IT organization’s major IT themes for 2007?” Base: 318 decision-makers at European enterprises Source: Forrester’s Business Technographics® November 2006 European Enterprise IT Budgets And Spending Survey
    6. 6. Packaged apps spending shows continuous growth “ How does your company’s 2007 planned spend compare with its actual spend in 2006?” Index 2007 2006 35% 23% 18% 14% 8% 3% 32% 20% -1% N/A 8% -9% Base: 218 decision-makers at European enterprises (percentages may not total 100 because of rounding) Source: Forrester’s Business Technographics® November 2006 European Enterprise IT Budgets And Spending Survey
    7. 7. The state of software investments 2007 — North America: ERP upgrades are a major priority “ The volume of application software purchases will increase in 2007” “ In 2007, will your company purchase any of the following?” “ In which vendor’s ERP software will you invest?” 2% 6% 13% 6% 6% 4% 4% 4% 19% 8% 21% 10% 25% 5% 6% 28% 18% 25% 10% 27% 16% 31% 14% 45% 15% 25% 7% 22% 33% 22% 26% 27% N/A † 41% 44% 56% Percentage of enterprises last year purchasing or upgrading* Base: 227 application software decision-makers at North American enterprises that will make purchases of ERP software in 2007 (multiple responses accepted); Base: 471 application software decision-makers at North American enterprises*; Base: 379 application software decision-makers at North American enterprises; Source: Forrester’s Business Technographics® November 2006 European Enterprise IT Budgets And Spending Survey First-time purchase Major upgrade Minor upgrade Messaging, email, and collaboration software Customer service and support software Business intelligence (BI) software Enterprise resource planning (ERP) software Sales force automation (SFA) software Marketing automation software Sell-side eCommerce software Procurement or sourcing software SAP Microsoft Oracle Other
    8. 8. The state of software investments 2007: Europe “ Procurement and sourcing software purchase volumes will grow most in 2007” “ In 2007, will your company purchase any of the following?” “ In which vendor’s ERP software will you invest?” Percentage of enterprises last year purchasing or upgrading* Base: 99 application software decision-makers at European enterprises that will make purchases of ERP software in 2007 (multiple responses accepted); Base: 196 application software decision-makers at European enterprises *; Base: 204 application software decision-makers at European enterprises First-time purchase Major upgrade Minor upgrade Messaging, email, and collaboration software Customer service and support software Business intelligence (BI) software Enterprise resource planning (ERP) software Sales force automation (SFA) software Marketing automation software Sell-side eCommerce software Procurement or sourcing software SAP leads by a wide margin in Europe Source: Forrester’s Business Technographics® November 2006 European Enterprise IT Budgets And Spending Survey Oracle Microsoft SAP Other 16% 11% 17% 41% 33% 18% 27% 30% 31% 43% N/A † 50% 5% 15% 33% 7% 17% 27% 8% 13% 26% 6% 15% 19% 7% 9% 22% 3% 9% 20% 6% 9% 16% 4% 3% 14% 43%
    9. 9. Agenda <ul><li>Market trends and survey data </li></ul><ul><li>Overview of the ERP market </li></ul><ul><li>The on-going technology evolution </li></ul><ul><li>Key vendors and product strategies </li></ul><ul><li>The future of ERP </li></ul><ul><li>Questions and answers </li></ul>
    10. 10. Enterprise apps vendor and market trends <ul><li>Apps vendor consolidation continues </li></ul><ul><ul><li>Oracle and Infor are the biggest acquirers </li></ul></ul><ul><li>Saturation at the upper end </li></ul><ul><ul><li>Most enterprise deals are with existing customers </li></ul></ul><ul><li>Customer retention is the top vendor priority </li></ul><ul><li>Architectural evolution </li></ul><ul><ul><li>SOA and middleware being used to drive customer lock-in </li></ul></ul><ul><li>Transition to recurring and variable revenue models </li></ul><ul><ul><li>Maintenance is driving industry growth </li></ul></ul>
    11. 11. Maintenance continues to drive market growth Base: Worldwide revenues 8.0 8.4 4.8 Source: Forrester
    12. 12. Top 10 ERP vendors by total revenues ($ millions) <ul><li>Source: Forrester Research. </li></ul><ul><li>These revenues are for the vendors’ fiscal quarters that most closely correspond to calendar year 2006. Vendor revenues calculated in currencies other than US dollars have been converted to US dollars using the average daily exchange rates. </li></ul><ul><li>*Infor revenues based on vendor estimate following SSA Global, Extensity and Workbrain acquisition announcements. </li></ul><ul><li>**Lawson annual revenues based on last four quarters as of Feb., 2007 </li></ul>** *
    13. 13. ERP vendor competitive positioning Large enterprise Midmarket Small business SAP mySAP ERP Oracle EBS and PeopleSoft NetSuite Lawson SAP Business One Microsoft Dynamics AX Microsoft Dynamics NAV, GP, SL Oracle JDE E1 Epicor Sage Group Infor Exact Agresso SAP All-In-One SAP A1S (future)
    14. 14. Agenda <ul><li>Market trends and survey data </li></ul><ul><li>Overview of the ERP market </li></ul><ul><li>The on-going technology evolution </li></ul><ul><li>Key vendors and product strategies </li></ul><ul><li>The future of ERP </li></ul><ul><li>Questions and answers </li></ul>
    15. 15. Next-generation architecture strategies — the road to SOA Batch On-line midrange Client/ server Web client Service- oriented architectures 1970s 1980s 1990s 2000s 2010s
    16. 16. Business drivers need to be linked to SOA <ul><li>Business drivers </li></ul><ul><li>Adapt system to processes, not vice versa </li></ul><ul><li>Improve usability </li></ul><ul><li>Deliver relevant analytics </li></ul><ul><li>Connect to external data and services </li></ul><ul><li>Leverage best practices and industry knowledge </li></ul><ul><li>Technology drivers </li></ul><ul><li>Reduce custom coding through configuration </li></ul><ul><li>Adopt open standards to reduce integration costs </li></ul><ul><li>Enable end users self-sufficiency </li></ul><ul><li>Provide more flexibility to use best-of-breed and composite apps </li></ul>
    17. 17. Customer challenges with the SOA direction <ul><li>Expensive and disruptive upgrades required </li></ul><ul><li>Lock-in to middleware platforms, fewer apps vendor choices </li></ul><ul><li>Messaging doesn’t resonate with business users </li></ul><ul><li>Unclear time frames </li></ul><ul><li>Difficult to verify vendor success in achieving SOA milestones </li></ul>
    18. 18. Agenda <ul><li>Market trends and survey data </li></ul><ul><li>Overview of the ERP market </li></ul><ul><li>The on-going technology evolution </li></ul><ul><li>Key vendors and product strategies </li></ul><ul><li>The future of ERP </li></ul><ul><li>Questions and answers </li></ul>
    19. 19. SAP’s application strategy — overview <ul><li>SAP announced SOA strategy in 2004 </li></ul><ul><li>Leading vision in the industry on SOA transition, but marketing messages remain arcane </li></ul><ul><li>SAP ERP 6.0 is on the critical upgrade path </li></ul><ul><ul><li>New incremental approach for future releases </li></ul></ul><ul><ul><li>Sticking to 2007 completion of SOA enablement </li></ul></ul><ul><ul><li>NetWeaver 2004 is critical for enhancement packages </li></ul></ul><ul><li>Considerable amounts of proprietary ABAP will be retained </li></ul><ul><li>New midmarket product features model-based design </li></ul><ul><li>IVN’s, xApps drive vertical development on NetWeaver </li></ul>
    20. 20. A1S is a departure from SAP’s traditional licensed strategy Source: February 12, 2007, “SAP Bolsters Midmarket Focus With Two New Offerings” ERP functionality User interface SOA strategy Deployment Middleware Target market
    21. 21. Oracle’s application strategy — overview <ul><li>Project Fusion announced in January 2005, clarified a year later </li></ul><ul><li>Transition to Fusion Middleware starts with upcoming releases of current products </li></ul><ul><ul><li>Existing products are being enhanced and supported indefinitely via Applications Unlimited </li></ul></ul><ul><ul><li>Acquisitions now focus on industry-specific apps </li></ul></ul><ul><ul><li>Products will adopt Fusion Middleware over time </li></ul></ul><ul><li>Fusion Apps will be largely based on the EBS schema and design concepts </li></ul><ul><li>Legacy apps will assume more middleware components </li></ul><ul><li>AIA provides a framework for partnership in verticals </li></ul>
    22. 22. Microsoft Dynamics strategy — overview <ul><li>Backed away from its commitment to deliver a converged product line </li></ul><ul><ul><li>Promoting UI and technology consistency across existing products with Microsoft standards </li></ul></ul><ul><ul><li>AX and NAV products will receive more development effort </li></ul></ul><ul><li>Likely to move up market aggressively, starting with business performance/analytics and CRM </li></ul><ul><li>SaaS beginning to factor into development plans </li></ul><ul><li>Partner strategy delivers key micro-vertical last mile solutions </li></ul><ul><li>Usability and user experience remains the industry standard for enterprise software </li></ul>
    23. 23. Infor’s application strategy <ul><li>Infor continues to be an aggressive aggregator of overlapping and complementary solutions </li></ul><ul><ul><li>Acquisitions focused on AS/400 (System-I) and .Net based vendors </li></ul></ul><ul><ul><li>Undervalued players acquired for economies of scale </li></ul></ul><ul><li>Huge ERP product portfolio must be rationalized </li></ul><ul><ul><li>Legacy products continue to generate maintenance revenues </li></ul></ul><ul><ul><li>New development offered as extended solutions </li></ul></ul><ul><ul><li>Promise to never sunset a customer may be hard to keep </li></ul></ul><ul><li>SOA development efforts enable cross-application </li></ul><ul><ul><li>Future capabilities centered around a non-proprietary SOA platform </li></ul></ul><ul><ul><li>SOA strategy may lead to overall lower TCO </li></ul></ul><ul><li>Acquisitions will continue </li></ul><ul><ul><li>Horizontal holes (e.g., Workbrain) </li></ul></ul><ul><ul><li>Vertical expansion </li></ul></ul>
    24. 24. Agenda <ul><li>Market trends and survey data </li></ul><ul><li>Overview of the ERP market </li></ul><ul><li>The on-going technology evolution </li></ul><ul><li>Key vendors and product strategies </li></ul><ul><li>The future of ERP </li></ul><ul><li>Questions and answers </li></ul>
    25. 25. 2007-2009: Technology convergence creates dynamic applications Portals, collaboration, and content Business process management Service- oriented architectures Business intelligence Dynamic applications
    26. 26. Dynamic applications will provide new levels of flexibility and user relevance <ul><ul><li>User-centric — accessible and role-specific </li></ul></ul><ul><ul><li>Process-oriented — targets a business goal </li></ul></ul><ul><ul><li>Flexible — driven by changeable models and rules </li></ul></ul><ul><ul><li>Collaborative — enables work across space and time </li></ul></ul><ul><ul><li>Context-driven — responds to business events </li></ul></ul><ul><ul><li>Dynamic — changes in business time, without programmers </li></ul></ul><ul><ul><li>Information-rich — all the information needed to make decisions and take actions, assembled in context in one place </li></ul></ul><ul><ul><li>Built for SaaS — can be deployed quickly and supported as hosted services </li></ul></ul>
    27. 27. Solutions-focused software and services ecosystem A hypothetical software vendor’s digital business networked ecosystem Customer Hardware platforms Dell, EMC, HP, IBM, and Sun Middleware platform BEA, IBM, Microsoft, Oracle, SAP, Sonic, Tibco Analytics and reporting platform BOBJ Cognos, Hyperion, and SAS Office productivity/ information management IBM and Microsoft Database IBM DB2, Microsoft, Oracle, and Sybase Storage technologies EMC and IBM OEM: solutions provider Applications from ISVs Agresso, Deltek, Epicor, Exact, Infor, Lawson, Microsoft, Oracle, SAP Suppliers Distributors Managed application services provider Business process outsourcing Third-party financing Key Financing and Siemens ISV partner or resellers Last mile solutions Accenture, IBM, Infosys, Satyam, TCS and Wipro Implementation partnerships Accenture, BearingPoint, Capgemini, Deloitte, EDS, Fujitsu, Hitachi, Infosys, Satyam, TCS and Wipro
    28. 28. Emerging ERP vendor landscape <ul><li>Innovators </li></ul><ul><li>Workday </li></ul><ul><li>SAP </li></ul><ul><li>NetSuite </li></ul><ul><li>Microsoft </li></ul><ul><li>Epicor Software Corporation </li></ul><ul><li>Consolidators </li></ul><ul><li>Oracle </li></ul><ul><li>Infor </li></ul><ul><li>Sage Group </li></ul><ul><li>Private equity firms </li></ul>
    29. 29. Application software selection process *Optional tasks Decide <ul><li>Develop project charter </li></ul><ul><li>Assemble project team </li></ul><ul><li>Define high level requirements </li></ul><ul><li>Identify candidate vendors </li></ul><ul><li>Refine requirements </li></ul><ul><li>Narrow choices </li></ul><ul><li>Determine selection criteria </li></ul><ul><li>Configure Forrester Wave ™ * </li></ul><ul><li>Develop demonstration scenarios </li></ul><ul><li>Orchestrate scripted demos </li></ul><ul><li>Analyze vendor offers </li></ul><ul><li>Score vendors </li></ul><ul><li>Conduct contract negotiations </li></ul><ul><li>Choose vendor </li></ul><ul><li>Validate choice via proof-of-concept (POC)* </li></ul><ul><li>Transition to implementation </li></ul>Evaluate Refine Organize
    30. 30. Recommendations to business and IT apps professionals <ul><li>Business process professionals </li></ul><ul><li>Choose applications that are designed for process flexibility </li></ul><ul><ul><li>Acquire proficiency in apps configuration and reporting tools </li></ul></ul><ul><li>Use SaaS for point solutions that can be managed by the business </li></ul><ul><li>Collaborate with IT to optimize use of ERP packages </li></ul><ul><li>IT apps professionals </li></ul><ul><li>Stay current on releases to keep migration options open </li></ul><ul><li>Base upgrade decisions on business needs and IT risk </li></ul><ul><li>Consolidate disparate ERP applications </li></ul><ul><li>Reduce maintenance fees and support costs </li></ul>
    31. 31. Agenda <ul><li>Market trends and survey data </li></ul><ul><li>Overview of the ERP market </li></ul><ul><li>The on-going technology evolution </li></ul><ul><li>Key vendors and product strategies </li></ul><ul><li>The future of ERP </li></ul><ul><li>Questions and answers </li></ul>
    32. 32. Thank you Paul Hamerman [email_address] Ray Wang [email_address] www.forrester.com
    33. 33. Selected Bibliography for Paul Hamerman <ul><li>(In process) October 2007: Forrester Wave, Business Performance Solutions, Q4 2007 </li></ul><ul><li>July 20, 2007, Application Vendor Selection: Making The Process Work For You </li></ul><ul><li>June 8, 2007, ERP Applications 2007: Innovation Rekindles </li></ul><ul><li>March 30, 2007, “Learning and Talent Management Join Forces: </li></ul><ul><li>March 20, 2007, “Segregation Of Duties: A Building Block For Enterprise IT Controls” </li></ul><ul><li>February 7, 2007, “Business Performance Solutions: The Competition Heats Up” </li></ul><ul><li>December 18, 2006, “Application Upgrades: When And Why” </li></ul><ul><li>September 28, 2006, “The Forrester Wave™: Human Resource Management Systems, Q3 2006” </li></ul><ul><li>June 29, 2006, “ERP Applications — Market Outlook Improves Ahead Of The Architectural Battle” </li></ul><ul><li>March 31, 2006, “Oracle Versus SAP In Enterprise Applications: Let The Battle Of Architectures Begin!” </li></ul><ul><li>January 23, 2006, Market Overview “HR/HCM Applications: Strategic Processes Move To The Forefront” </li></ul>
    34. 34. Selected Bibliography for R “Ray” Wang <ul><li>August 13, 2007, “Competition Intensifies For The SMB ERP Customer” </li></ul><ul><li>May 31, 2007, “The Order Management Missing Link: A Single Process Owner” </li></ul><ul><li>May 7, 2007, “Solutions-Centric Ecosystems Disrupt The Enterprise Software World Order” </li></ul><ul><li>March 15, 2007, “ Enterprise Applications Software Licensing and Pricing Quarterly Update” </li></ul><ul><li>March 2, 2007, “ERP Software Upgrades in SMB and Enterprises” </li></ul><ul><li>February 12, 2007, “SAP Bolsters Mid-market Focus With Two New Offerings:, </li></ul><ul><li>February 7, 2007, “Be Not Afraid of ERP Instance Consolidation” </li></ul><ul><li>December 18, 2006, “An Enterprise Software Licensee’s Bill of Rights” </li></ul><ul><li>November 2, 2006, “The State Of Enterprise Software Adoption” </li></ul><ul><li>October 30, 2006, “ Enterprise Applications Vendor Selection” </li></ul><ul><li>September 20, 2006, “Comparing The ROI Of SaaS Versus On-Premise Using Forrester's TEI™ Approach” </li></ul><ul><li>September 19, 2006, Quick Take “SAP Revamps Its Release Strategy” </li></ul><ul><li>August 29, 2006, “Assessing New Vendor Financing Options” </li></ul>

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